This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

They're Practically Giving Apple Away

NEW YORK ( TheStreet) -- Tim Cook, who has famously told investors he doesn't care about his stock price, actually cares a lot about his stock price.

With a $50 billion share buyback fueled by cheap debt, plus a higher dividend, Cook signaled to investors when he released earnings on April 23 that Apple (AAPL - Get Report) is determined to raise its share price.

Since that announcement, it's up 13%. That's better than Microsoft (MSFT) , which is up just 10% in that time. But go back a month and Microsoft's gains are 17%, Apple's just 9%. Apple is practically having to pay people to hold its stock in order to keep up with its Redmond rival.

What's going on? Microsoft isn't paying people to own its stock. It's not gaining market share. Apple is doing both, yet it lags.

The truth is that, in technology, no one cares about what you've done but what you're going to do. The goodwill that's such a fungible commodity in every business means everything in technology. It's all about what they think you're going to do for them, not even what you have done.


Despite everything Apple tries, most analysts don't think it's about to do much. The hype is about Google Glass, not the iPhone 6, or the 5S, or even the possibility of an Apple TV. Even MacWorld, which covers Apple exclusively, is bemoaning the sad state of the Apple rumor pipeline, even while noting that the iPod, which defined the company, wasn't even a rumor until a week before it was unveiled.

But Apple has grown more than 10%, year over year, as reported in its latest earnings statement. It still sports operating margins of 25%. It's now number six on the Fortune 500, up from number 17 a year ago. (Microsoft, by contrast, is number 35.)

Put a market multiple of 14.5 on the $41.89 in earnings Apple achieved in the last four quarters and this is a $600 stock. If it can even achieve the multiples of IBM (IBM) it's a $550 stock, a price I consider fair. Microsoft, by contrast, is already trading at a premium to that, a hefty premium, with a PE of 17.36. Google (GOOG), meanwhile, is trading at over 25 times earnings.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.54 0.00%
FB $80.54 0.00%
GOOG $540.11 0.00%
TSLA $247.73 0.00%
YHOO $43.48 0.00%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs